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THIS WEEK'S UPDATE

| March 18, 2024


Stocks fell for the second straight week on inflation concerns despite a report on consumer prices that was initially well received by investors.
 
Stocks Slide… A Little
Tuesday was the only bright spot during the week as stock prices rose after the Labor Department report showed the Consumer Price Index rose 3.2% in February compared with a year earlier. It was a bit warmer than economists expected but cooler than investors feared. The news sparked a day-long rally, with the Standard & Poor’s 500 stock index setting its 17th record high of the year. 
 
Following Tuesday, caution lingered as investors parsed the underlying data behind headline consumer inflation numbers. Thursday's fresh producer price index (PPI) report showed that wholesale prices increased by 0.6% in February, more than the expected 0.3% increase. Additionally, core PPI (excluding food and energy) was hotter than expected.  Retail sales, also reported on Thursday, were disappointing, rising less than expected and adding to the inflation angst. The news rattled investors and contributed to stocks closing lower for three consecutive days to end the week.
 
Broadening Leadership
Unlike the prior week when the S&P 500 fell the least, last week it lost slightly more than the Dow but less than the Nasdaq. That performance pattern suggests market leadership may be broadening. Also, the energy, financials, and materials sectors all posted gains last week, showing that other groups may join the tech-led rally.
 
This Week: Key Economic Data
Monday: Housing Market Index.
Tuesday: FOMC Meeting Begins. Housing Starts and Permits. 20-Year Treasury Bond Auction.
Wednesday: FOMC Announcement. Fed Chair Press Conference. EIA Petroleum Status Report.
Thursday: Jobless Claims. Existing Home Sales. Fed Balance Sheet.
 
This Week: Notable Companies Reporting Earnings
Tuesday: GameStop Corp. (GME)
Wednesday: Micron Technology, Inc. (MU), General Mills, Inc. (GIS), Five Below, Inc. (FIVE), Chewy (CHWY)
Thursday: NIKE, Inc. (NKE), FedEx Corporation (FDX), lululemon athletica inc. (LULU), Darden Restaurants, Inc. (DRI)
 
Final Thoughts
The big news this week is going to be the Fed’s commentary around interest rates on Wednesday afternoon. While inflation has tamed from where it was, they aren’t going to cut rates this month or probably at all until mid-summer.  Why would they?  The economy is humming along just fine where rates are now.  If it begins to stall, they have plenty of ammunition.  Now, at some point it will stumble and there will be some catalyst that causes a disruption.  It just isn’t clear today when a slowdown will occur or what will lead us there.  So, for now, no rate cuts.  The market already knows this, but the talking heads will parse every word.  
 
The market has had a hard run the past several months.  While I think the year will end up strong, it wouldn’t surprise me if we took a bit of a breather.  

Stay tuned…